Final Results

Dublin, London, 20 May 2014: C&C Group plc (‘C&C’ or the
'Group’), a leading manufacturer, marketer and distributor of branded
cider, beer, wine and soft drinks announces results for the year ended
28 February 2014.

FY2014

% change

Net Revenue

€620.2m

+30.0%

EBITDA(i)

€150.7m

+10.6%

Operating profit(ii)

€126.7m

+10.6%

Free cash flow*(iii)

€78.5m

+31.5%

Free cash flow*/EBITDA (% conversion)

52%

Basic Earnings per Share (EPS)

24.7 cent

-9.2%

Adjusted diluted EPS(iv)

29.5 cent

+5.7%

Dividend per share

10.0 cent

+14.3%

Net debt/EBITDA(v)

0.99x

* before cash outflow for exceptional items

FY2014 Highlights

FY2014 operating profit(ii) growth of 10.6% to €126.7
million in line with stated guidance. This outcome represents a solid
performance with double-digit operating profit growth from four of the
Group’s five reporting segments.

C&C recorded a particularly strong performance in Ireland and
Scotland. The acquisition of Gleeson and the investment in Wallaces
Express represented significant steps toward the development of
customer centric, multi-beverage business models in these markets.

The evolution of the business model in core markets contributed
positively to the performance of the Group’s brands. In ROI, C&C
ciders improved market share(vii), grew volume and
increased revenue for the first time in seven years. In Scotland and
Northern Ireland, Tennent’s and our portfolio of brands continued to
deliver growth in the Independent Free Trade, achieving impressive
market share, revenue growth and volume gains.

Cider UK performance stabilised in the second half of the year. The
cider category has commoditised and focus remains on developing and
maintaining profitable positions in a competitive market.

The international business as a whole continues to develop with
operating profit up 68% in FY2014 (on a constant currency basis(vi).

In the US, extensive wholesaler consolidation and business integration
concluded successfully during the year. Increased investment and new
entrants fuelled high growth in the cider category but C&C volume
growth was disappointingly behind the category. However, C&C remains
confident in the prospects for its portfolio of authentic cider brands
in the US market.

We are pleased with progress in innovation and new product
development: Caledonia Best ale, Heverlee hand crafted premium Belgian
lager, Tennent’s Beer aged in Whisky Oak and Tennent’s Stout have
delivered growth. We also recently launched Montano Italian cider and
in Ireland, Bulmers is launching Clonmel 1650, a new premium Irish
lager.

C&C has strong underlying cash generative capability. Net debt/EBITDA(v)
at the year-end was less than 1.0x despite an unusually high level of
cash investment in acquisitions and expansion. The latter including a
new cidery in Vermont and new craft breweries in Clonmel and Glasgow.

C&C’s proposed final dividend is 5.7 cent per share, representing full
year dividend growth of 14.3% compared with last year. The increase
reflects the Group’s strong balance sheet, underlying cash generation
capability and commitment to deliver value for shareholders.

For note references please see page 14

Stephen Glancey, C&C Group CEO, commented:

“FY2014 is our fifth successive year of earnings growth and our full
year outcome represents a robust performance with continued progress
against all financial measures. This performance was delivered while
managing the change associated with the integration of recent
acquisitions in Ireland, Scotland and the US.

Despite investing just over €80 million of capital during the year, our
balance sheet remains strong with net debt/EBITDA of less than 1.0x at
the year end. Balance sheet strength, strong cash generation capability
and resilient core markets will sustain a progressive dividend stream
with full year dividend growth of 14.3%.

The cornerstone of our strategy is maintaining strong domestic brand
market combinations. FY2014 marked continued progress towards this
objective with the development of a customer focused, multi-beverage
model in Scotland and Ireland. This includes an expanded and
well-invested brand portfolio and enhanced sales force capability. In
Scotland we are pleased with progress on Caledonia and Heverlee and in
Ireland we are optimistic on the prospects for our new Irish lager,
Clonmel 1650.

Macro conditions in Ireland and the UK are gradually improving and our
businesses are well positioned to benefit from improved consumer
sentiment in these key markets. In the UK, the broader cider market
remains competitive and commoditised. We are focused on building a
portfolio of authentic, traditional high quality ciders targeting the
premium, and craft segments of the market.

In the US, the combined impact of integration, increased competition and
distributor consolidation materially impacted our performance. While we
have re-based our own short term expectations of growth, the market
remains both attractive and dynamic.

With integration behind us, we are focused on a range of commercial and
marketing initiatives to improve operating performance. Longer term, our
investment in the new cidery in Vermont reflects our commitment to the
US and the absolute authenticity of our product. We are passionate about
the quality of our beers and ciders. Our credentials were recently
confirmed with wins of first, second and third places in both of the
hard cider award categories at the World Expo of Beer in the US. In
England we were awarded a number of medals for Newton Vale and Chaplin &
Cork’s cider at the Shepton Mallet Cider Mill.

We believe there are a number of factors which define our business.
These factors sustain our belief in C&C’s ability to perform and its
future prospects. A resilient, multi-beverage customer-centric model in
Ireland and Scotland provides us with a strong and sustainable earning
and free cash flow base. This, coupled with our balance sheet strength,
allows us to capitalise on the opportunities represented by higher
growth international markets through participation and exports.

C&C believes that the fundamentals of its core markets and its position
within those markets support continued earnings growth. For the current
financial year, the objective is to deliver mid-single digit operating
profit growth.”

About C&C Group plc

C&C Group plc is a manufacturer, marketer and distributor of branded
cider and beer. The Group manufactures Bulmers, the leading Irish cider
brand, Magners, the premium international cider brand, Gaymers cider and
the Shepton Mallet Cider Mill range of English ciders and the Tennent's
beer brand. C&C Group also owns Woodchuck and Hornsby’s, two of the
leading craft cider brands in the United States. The Group’s Irish
wholesaling subsidiary, Gleeson Group, manufactures Tipperary Water and
Finches soft drinks. The Group also distributes a number of beer brands
in Scotland, Ireland and Northern Ireland, primarily for Anheuser-Busch
Inbev, and owns Wallaces Express a Scottish drinks wholesaler.

Note regarding forward-looking statements

This announcement includes forward-looking statements, including
statements concerning current expectations about future financial
performance and economic and market conditions which C&C believe are
reasonable. However, these statements are neither promises nor
guarantees, but are subject to risks and uncertainties, including those
factors discussed on pages 15 to 16 that could cause actual results to
differ materially from those anticipated.

C&C’s LAD(vii) volumes in ROI were up 1.1% and ahead of a
market that was level year on year. A robust performance in the on-trade
helped deliver a positive price/mix of +1.1%. Operating profit increased
9.4% to €43.0 million with operating profit margin improving by 3ppts to
45.6%. Reduced spend on consumer marketing and some cost benefit from
the integration of Gleeson into the Group’s ROI business contributed to
the margin uplift.

Cider in ROI

In FY2014, cider net revenue increased by 1.7% of which volume accounted
for 0.7% and price/mix for 1.0%. Bulmers brand volume finished slightly
ahead of the prior year helping to increase its share of LAD by 50 basis
points to 9.2%. The brand experienced positive volume swings of 8ppt and
7ppt in the on-trade and off-trade, respectively. In both channels of
trade the brand outperformed the marketplace, highlighting the
beneficial impact of a good summer on cider consumption.

The Bulmers brand is in strong health and the new 2013-14 “Now is a
Good Time” advertising campaign, digital media and various
sponsorship events appear to be resonating well with consumers and
helping to keep the brand relevant and front of mind. As C&C’s Irish
business model continues in its evolution towards a customer centric
model, investment in sales, customer lending and price have reduced the
levels of consumer marketing required. Over the past 12 months,
advertising and promotion spend was €3.0 million lower than last year.
Value growth in both the on and off-trade channels suggests that brand
presence is certainly undiminished.

Beer in ROI

The Group’s enhanced route to market and on-trade position in ROI
contributed to a market outperformance in the on-trade with Tennent’s
volume up 14.6% and ABI branded volume up 39.8%. Despite a decline of
16.0% for Tennent’s in the off-trade, overall beer volume for the Group
was up 3.7% year on year. The enhanced distribution and sales reach
acquired through the Gleeson business gives reason to be optimistic on
the outlook for C&C beer in the ROI on-trade.

As a measure of confidence in the reconfigured business model, C&C
recently completed construction of a new craft brewery in Clonmel and is
launching Clonmel 1650, a premium, authentic Irish lager.

Gleeson

The Gleeson business performed in line with first year expectations.
Despite a complex and challenging integration there was no significant
disruption to customer service or operational performance. In the 12
months to 28 February 2014, Gleeson recorded net revenue of €143.1
million, EBITDA(i) of €8.3 million and operating profit(ii)
of €5.2 million.

Initial synergies from the consolidation of sales, marketing and finance
overheads provided some benefit for the Bulmers margins in FY2014. Full
year benefit will flow through in FY2015. In addition, the Group expects
to begin delivering on revenue and operational synergies over the next
few years, improving on this year’s reported operating margin of 3.6%
for Gleeson.

For note references please see page 14

Cider – United Kingdom │ Operations Review

Cider UK

Constant Currency(vi)

FY2014

€m

FY2013

€m

Change

%

Revenue

164.1

188.4

(12.9%)

Net revenue

112.8

132.7

(15.0%)

- Price/mix impact

(4.0%)

- Volume impact

(11.0%)

Operating profit

20.7

29.2

(29.1%)

Operating margin (Net revenue)

18.4%

22.0%

Volume – (kHL)

1,082

1,216

(11.0%)

Cider UK

Volume of C&C ciders began to stabilise in the second half of the year
with a decline of 6.8% comparing to 14.0% in the first half and 22.2% in
Q1 2014. Performance was some way below a category that returned to
volume growth of 2%(vii) this year, boosted by a good summer.
The proliferation of new entrants and range extensions into cider
continues to commoditise the cider space in England and Wales and
pricing remains under pressure for brands reliant on national
distribution and scale. For C&C, price/mix declined by 4.0% in the year,
leading to net revenue being down 15.0%.

The Group recognises the scale and importance of the UK cider category
and continued to invest in its assets during FY2014. Rather than
retrench in the face of market headwinds, a new advertising campaign for
Magners was launched and investment in the Shepton Mallet cider business
up-weighted. This partially accounts for an operating profit decline of
29.1% to €20.7 million and a 3.6ppt drop in Cider UK's operating margin
to 18.4%.

The investment decisions reflect our view that both the authenticity of
the Magners brand and the differentiation offered by the brands within
the Shepton portfolio give them long term value worth protecting and
supporting.

In Scotland and Northern Ireland, the superior strength of our business
model and portfolio helped to deliver category outperformance in FY2014.

Magners brand

Magners brand volume declined by 10%. Distribution remained broadly
static with the loss of volume attributable to a lower rate of sale per
outlet, reflecting increased consumer choice in the fridge and on the
shelf.

In Scotland, the brand performed well growing 6.5% year on year and
picking up market share. Magners Golden Draught in Scotland was up 17.6%.

Gaymers and Shepton Mallet Cider Mill (SMCM) portfolio

The SMCM branded portfolio experienced a slight recovery in the year.
Excluding the Gaymers brand, portfolio volume was down 9% compared to
18% in the previous year. The Gaymers brand had a difficult year with
competition significantly increasing in the fruit segment.

Those brands within the portfolio that are not exposed to the national
distribution dynamics have shown encouraging signs during the year.
Addlestones is beginning to develop and K Cider grew 13% in the year.
The new product development (‘NPD’) pipeline is healthy with encouraging
feedback following the launch of Hornsby's in the UK and Montano Italian
cider. The business picked up a number of awards during the year for
niche and premium craft cider developments.

For note references please see page 14

Tennent’s UK │ Operations Review

Tennent’s UK

Constant Currency(vi)

FY2014

€m

FY2013

€m

Change

%

Revenue

216.2

220.5

(2.0%)

Net revenue

103.6

104.7

(1.1%)

- Price/mix impact

0.5%

- Volume impact

(1.6%)

Operating profit

34.6

29.1

18.9%

Operating margin (Net revenue)

33.4%

27.8%

Volume – (kHL)

1,273

1,294

(1.6%)

Tennent’s UK

Tennent’s operating profits increased by 18.9% to €34.6m. Operating
margins improved by 5.6ppt to 33.4% reflecting improved channel mix,
successful new product launches and cost reduction. On-trade volume grew
3.1% year on year, representing good share gain in a channel of trade
that was down 7.0%(vii) in Scotland. For the third
consecutive year, Tennent’s pricing to the independent free trade was
held flat. Overall total volumes declined by 1.6%.

We are pleased with the progress of Caledonia Best which has captured
9.6%(vii) of the on-trade draught ale category in Scotland
since its launch. Equally, Heverlee, our authentic hand-crafted premium
Belgian lager, is selling well in Scotland and Northern Ireland. We
continue to invest in trade lending with £9.5 million advanced during
the year, taking our trade loan book in Scotland to £31.0 million.
Looking to the longer term, the acquisition of Wallaces Express
reinforces our customer-centric, multi-beverage model and the investment
in a craft brewery in Glasgow via a joint venture with Williams Bros
will facilitate participation in the craft arena.

Tennent’s Lager is the top selling lager in the on-trade in Northern
Ireland. Volumes declined 6.4% in the year.

C&C has continued to demonstrate its commitment to Northern Ireland by
relocating meaningful skilled resource to Belfast and continuing to
invest behind the on-trade. This has helped to secure a handful of
flagship accounts, the benefit of which should flow through in years to
come.

Heverlee was also launched in Northern Irish pubs and appears to have
been well received by publicans and consumers alike.

For note references please see page 14

International │ Operations Review

International

Constant Currency(vi)

FY2014

€m

FY2013

€m

Change

%

Revenue

79.9

47.2

69.3%

Net revenue

77.1

46.6

65.5%

- Price/mix impact

(1.7%)

- Volume impact

67.2%

Operating profit

16.0

9.5

68.4%

Operating margin (Net revenue)

20.8%

20.4%

Volume – (kHL)

545

326

67.2%

International

In FY2014, C&C’s international volumes increased by 67.2% and
consequently, profit generated outside of the domestic markets increased
to €16.0 million, equal to 12.6% of the Group’s operating profit(ii).
(FY2014 includes the full year benefit of the Vermont Hard Cider Company
whereas FY2013 reflects the financial results for 2 months).

- United States

In the US, the focus of the last 12 months has been the integration of
the wholesaler network, finance, back office, manufacturing and sales
functions. This has been a significant task for the local management
team. However, by the end of the financial year, integration was broadly
complete and C&C’s entire US business is now managed and operated from a
single site by a single team. Critically, we now have a high quality and
stable wholesaler network.

The integration and re-positioning of the US business impacted
performance over the past 12 months at a time when competition also
intensified. Consequently, historic growth trends for the Woodchuck
brand were arrested in a challenging year. Over the past 12 months,
shipment volumes declined by 1% and market-wide depletions fell by 6%.
In addition, Magners and Hornsby’s shipment volumes declined by 17% and
40% respectively. For Woodchuck, the subdued volume trends relative to
the market are largely attributable to a lower rate of sale in the
off-trade and lost points of distribution in the on-trade.

The integration completed in FY2014 established a stable platform for
VHCC. Additionally, a series of commercial initiatives including the
opening of a brand new, state of the art $34.0 million cidery, packaging
updates and new marketing plans are designed to provide business impetus.

- Export

Export volumes increased by 11% year on year and represent 34% of
international volumes. We are now exporting to 47 countries with the top
five accounting for almost two thirds of such sales (excluding the US).

The Magners brand grew by 13% with Canada and Australia up 27% and 8%
respectively.

The Gaymers brand portfolio grew by 18% and Tennent’s continues to
perform strongly in Italy growing 12%.Tennent’s Beer aged in Whisky Oak
and Tennent’s Stout has been launched in selected international markets.
Although small in volume terms, C&C’s Asian business grew by 108% and we
are further investing in sales resource in FY2015.

For note references please see page 14

Third Party Brands UK │ Operations Review

Third Party Brands UK

Constant Currency(vi)

FY2014

€m

FY2013

€m

Change

%

Revenue

122.1

112.2

8.8%

Net revenue

89.4

86.7

3.1%

- Price/mix impact

(7.6%)

- Volume impact

10.7%

Operating profit

7.2

4.9

46.9%

Operating margin (Net revenue)

8.1%

5.7%

Volume – (kHL)

964

871

10.7%

Third Party Brands UK

This segment relates to the manufacturing and distribution of third
party products. Volumes increased by 10.7% to 964khl. Operating profit
for the period increased to €7.2 million (on a constant currency basis(vi),
taking the margin on this business up to 8.1%. Our route to market
capability and the strength of our local brands is attracting brand
owners to partner with C&C in Scotland and Ireland.

Volume growth on agency brands was 6.3% due to a strong performance in
the Scotland and Northern Ireland independent free trade. This result
also includes the International Wine Services (IWS) division, which is
now supplying a range of wines and spirits brands into the on-trade in
the UK.

For note references please see page 14

FINANCE REVIEW

Year ended

28 February

2014

€m

Year ended

28 February

2013

(restated)

€m

CC(vi) Year

ended

28 February

2013

€m

Change

%

CC -

Change

%

Net revenue

620.2

476.9

462.9

30.0%

34.0%

Operating profit(ii)

126.7

114.6

112.0

10.6%

13.1%

Net finance costs

(11.0)

(4.9)

Share of equity accounted investees’ profit after tax

0.5

-

Profit before tax

116.2

109.7

Income tax expense

(15.1)

(16.0)

Effective tax rate*

13.1%

14.6%

Profit for the year attributable to equity shareholders(ii)

101.1

93.7

Adjusted diluted EPS(iv)

29.5 cent

27.9 cent

5.7%

Dividend per Share

10.0 cent

8.75 cent

14.3%

Dividend payout ratio

33.9%

31.4%

* the effective tax rate is calculated based on the profit before tax
excluding the Group’s share of equity accounted investees’ profit after
tax

C&C is reporting net revenueof €620.2 million, operating
profit(ii) of €126.7 million and adjusted diluted EPS(iv)
of 29.5 cent. On a constant currency basis, net revenue and operating
profit(ii) increased 34.0% and 13.1% respectively. The
current year results include a full year contribution from VHCC and the
Gleeson wholesaling business in Ireland which the Group acquired in
March 2013.

FINANCE COSTS, INCOME TAX AND SHAREHOLDER RETURNS

Net finance costs increased to €11.0 million (2013: €4.9 million),
primarily reflecting a full year's debt drawdown to finance the
acquisition of VHCC in December 2012, a marginal reduction in the
effective interest rate and increased finance-related costs following
the setting up of a non-recourse debtor factoring facility in August
2013. On a time-weighted basis the average drawn debt increased from €49
million during FY2013 to €300 million during FY2014. Net finance costs
are also inclusive of an unwind of discount on provisions charge of €0.9
million (2013: €1.0 million) and a loss of €0.1 million (2013: nil) on
movement in fair value of derivative financial instruments.

The income tax charge in the year excluding exceptional items amounted
to €15.1 million. This represents an effective tax rate of 13.1%, a
reduction of 1.5 percentage points on the prior year. The reduction is
primarily due to the impact of acquisitions on the Group's profile and
the geographical mix of profits. The effective tax rate at 13.1%
continues to reflect the fact that the majority of the Group’s profits
are earned in jurisdictions, which have competitive tax rates relative
to European averages.

Subject to shareholder approval, the proposed final dividend of 5.7 cent
per share will be paid on 15 July 2014 to ordinary shareholders
registered at the close of business on 30 May 2014. The Group’s full
year dividend will therefore amount to 10.0 cent per share, a 14.3%
increase on the previous year. The proposed full year dividend per share
will represent a payout of 33.9% (FY2013: 31.4%) of the full year
reported adjusted diluted earnings per share. A scrip dividend
alternative will be available. Total dividends paid to ordinary
shareholders in FY 2014 amounted to €31.0 million, of which €27.9
million was paid in cash, €0.1 million was accrued with respect to LTIP
(Part I) dividend entitlements, while €3.0 million or 10% (FY2013: 25%)
was settled by the issue of new shares.

EXCEPTIONAL ITEMS

FY2014 represented a year of restructuring, integration and
consolidation. Consequently costs of €20.7 million were incurred, which
due to their nature and materiality were classified as exceptional items
for reporting purposes, a presentation which, in the opinion of the
Board, provides a more helpful analysis of the underlying performance of
the Group.

The items which were classified as exceptional include:-

(a) Restructuring costs of €6.1 million: comprising severance and
other initiatives arising from the integration of the Group’s Irish
businesses following the current year acquisition of the Gleeson group
and from cost cutting initiatives at the Group's manufacturing
facilities resulted in an exceptional charge before tax of €6.7 million
(2013: €1.2 million). This charge is reduced by a defined benefit
pension scheme curtailment gain of €0.6 million due to the reduction in
headcount numbers and the reclassification of these employees from
active to deferred members. A curtailment gain arises where the value of
the pension benefit of a deferred member is less than that of an active
member.

(c) Integration costs including write-off of redundant legacy IT
assets of€5.6 million: primarily relating to the
integration of the acquired Gleeson and VHCC businesses with the Group’s
existing business and the resulting streamlining of its IT requirements
leading to the write-off of IT assets no longer required.

(d) Redeployment of a bottling line incurring costs of €7.4 million:
during the financial year a bottling line was redeployed from the
Group's cider manufacturing facility in Clonmel to its cider
manufacturing facility in Shepton Mallet, Somerset. Costs of €6.6
million were incurred in this regard. As a result of this deployment an
existing PET line with a value of €0.8 million in Shepton Mallet became
redundant and was written off.

(e) Other costs of €0.5 million include costs incurred in
relation to the upgrading of the Group's listing on the Official List of
the UK Listing Authority from a standard listing to a premium listing
offset by the release of an excess onerous lease provision.

BALANCE SHEET STRENGTH, DEBT MANAGEMENT AND CASHFLOW GENERATION

Balance sheet strength provides the Group with the financial flexibility
to pursue its strategic objectives. The Group has a committed €350.0
million multi-currency five year syndicated revolving facility and is
permitted under the terms of the agreement to have additional
indebtedness to a maximum value of €150.0 million, giving the Group
total debt capacity of €500.0 million. The debt facility matures on 28
February 2017. As at 28 February 2014 net debt(viii) was
€145.2 million reflecting a net debt: EBITDA(v) ratio of less
than 1.0x.

Total assets reported by the Group were €1,380.5 million at 28 February
2014 (2013: €1,200.3 million). The Group’s portfolio of market leading
brands and related goodwill is valued at €718.9 million, representing
approximately 52% of total assets (2013: €705.8 million).

Brand values and goodwill are assessed for impairment on an annual basis
by comparing the carrying value of the assets with their recoverable
amounts using value in use computations. Sensitivity analysis was
performed on these calculations whereby the underlying assumptions (net
revenue, operating profit, discount and terminal growth rates) were each
negatively adjusted by 1 percentage point. Applying these individual
assumptions, while holding all other assumptions constant, to the value
in use computations did not indicate an impairment of the Group’s
goodwill or brands.

Cash generation

Management reviews the Group’s cash generating performance by measuring
the conversion of EBITDA to Free Cash Flow as we consider that this
metric best highlights the underlying cash generating performance of the
continuing business.

The Group's performance during the year resulted in an EBITDA to Free
Cash Flow conversion ratio of 40.9% (2013: 40.2%). The cash flow
performance was adversely impacted by a number of factors including
costs associated with integrating acquired businesses and restructuring
existing businesses to reflect the new business model in Ireland,
consulting and other costs directly related to the acquisition of
businesses, increased financing costs, trade lending and capital
expenditure. In addition taxation payments increased in line with an
increased level of UK taxable profits and the expiration of UK
accelerated capital allowances. A reconciliation of EBITDA to operating
profit and a summary cash flow statement are set out on page 12.

As shown above, the effective rate for the translation of results from
sterling currency operations was €1:£0.846 (year ended 28 February 2013:
€1:£0.813) and from US dollar operations was €1:$1.334 (year ended 28
February 2013: €1:$1.29). The effective rate for the translation of
sterling currency revenue/net revenue transactions by euro functional
currency operations resulted in an effective rate of €1:£0.86 (FY2013:
€1:£0.86).

Comparisons for revenue, net revenue and operating profit for each of
the Group’s reporting segments are shown at constant exchange rates for
transactions by subsidiary undertakings in currencies other than their
functional currency and for translation in relation to the Group’s
sterling and US dollar denominated subsidiaries by restating the prior
year at FY2014 effective rates. Applying the realised FY2014 foreign
currency rates to the reported FY2013 revenue, net revenue and operating
profit rebases the comparatives as shown below.

CONSTANT CURRENCY CALCULATION FOR YEAR ENDED 28 FEBRUARY 2013

Constant Currency Comparatives

Year ended28 February 2013

(restated)

FXTransaction

FXTranslation

Year ended

28 February 2013Constant currencycomparative

€m

€m

€m

€m

Revenue

ROI

133.8

-

-

133.8

Cider UK

195.8

-

(7.4)

188.4

Tennent’s UK

229.3

-

(8.8)

220.5

International

48.5

(0.6)

(0.7)

47.2

Third party brands UK

116.7

-

(4.5)

112.2

Total

724.1

(0.6)

(21.4)

702.1

Net revenue

ROI

92.2

-

-

92.2

Cider UK

137.8

-

(5.1)

132.7

Tennent’s UK

108.9

-

(4.2)

104.7

International

47.8

(0.6)

(0.6)

46.6

Third party brands UK

90.2

-

(3.5)

86.7

Total

476.9

(0.6)

(13.4)

462.9

Operating profit

ROI

38.7

0.6

-

39.3

Cider UK

31.3

(0.7)

(1.4)

29.2

Tennent’s UK

30.3

-

(1.2)

29.1

International

9.2

0.4

(0.1)

9.5

Third party brands UK

5.1

-

(0.2)

4.9

Total

114.6

0.3

(2.9)

112.0

Notes to Preliminary Announcement

(i)

EBITDA is earnings before exceptional items, finance income, finance
expense, tax, depreciation, amortisation charges and equity
accounted investees’ profit after tax. A reconciliation of the
Group’s operating profit to EBITDA is set out on page 12.

(ii)

Operating profit and Profit for the year attributable to equity
shareholders is before exceptional items. The prior year operating
profit has been restated on adoption by the Group of revised IAS 19
Employee Benefits; please see Note 4 to the condensed financial
statements on pages 23 to 24.

(iii)

Free Cash Flow is a non GAAP measure that comprises cash flow from
operating activities net of capital investment cash outflows which
form part of investing activities. Free Cash Flow highlights the
underlying cash generating performance of the on-going business. A
reconciliation of FCF to Net Movement in Cash & Cash Equivalents per
the Group’s Cash Flow Statement is set out on page 12.

(iv)

Adjusted basic/diluted earnings per share (‘EPS’) excludes
exceptional items. Prior year EPS has been adjusted in line with the
prior year restatement of operating profit on adoption by the Group
of revised IAS 19 Employee Benefits as outlined in Note 4 on pages
23 to 24. Please also see note 9 of the condensed financial
statements on pages 29 to 30.

(v)

Net debt/EBITDA is a financial ratio calculated in accordance with
the terms of the Group’s Revolving Credit Facility dated February
2012.

(vi)

On a constant currency basis; constant currency calculation is set
out on page 13.

Under Irish company law (Statutory Instrument 116/2005 European
Communities (International Financial Reporting Standards and
Miscellaneous Amendments) Regulations 2005), the Group and the Company
are required to give a description of the principal risks and
uncertainties which they face.

The principal risks and uncertainties faced by the Group’s businesses
are set out below. The Group considers that currently the most
significant risks to its results and operations over the short term are
(a) strategic failures, (b) levels of competition in Great Britain and
the United States and (c) failure to attract and retain high-performing
employees. The forthcoming vote on Scottish independence creates a
period of uncertainty.

Risks and uncertainties relating to strategic goals

The Group’s strategy is to focus upon earnings growth through organic
growth, acquisitions and joint ventures and entry into new markets.
These opportunities may not materialise or deliver the benefits or
synergies expected and may present new management risks and social and
compliance risks. The Group seeks to mitigate these risks through due
diligence, careful investment and continuing monitoring and management
post-acquisition.

Risks and uncertainties relating to revenue and profits

The GB off-trade and increasingly the GB on-trade continues to be highly
competitive, driven by consumer pressure, customer buying power and the
launch of heavily-invested competing products. The Group seeks to
mitigate the impact on volumes and margins through developing its
multi-beverage brand portfolio and seeking cost efficiencies.

The US cider market has also become highly competitive. The Group is
responding through brand investment and strengthening its distributor
network.

Consumer preference may change, new competing brands may be launched and
competitors may increase their marketing or change their pricing
policies. The Group has a programme of brand investment, innovation and
product diversification to maintain and enhance the relevance of its
products in the market.

Seasonal fluctuations in demand, especially an unseasonably bad summer
in Ireland or the UK, could materially affect demand for the Group’s
cider products. Geographical diversification is helping to mitigate this
risk.

Customers, particularly in the on-trade where the Group has exposure
through advances to customers, may experience financial difficulties.
The Group monitors the level of its exposure carefully.

Risks and uncertainties relating to costs and production

Input costs may be subject to volatility and inflation and the
continuity of supply of raw materials may be affected by the weather and
other factors. The Group seeks to mitigate some of these risks through
long term or fixed price supply agreements. The Group does not seek to
hedge its exposure to commodity prices by entering into derivative
financial instruments.

Circumstances such as the loss of a production or storage facility or
disruptions to its supply chains or critical IT systems may interrupt
the supply of the Group’s products. The Group seeks to mitigate the
operational impact of such an event by the availability of multiple
production facilities, fire safety standards and disaster recovery
protocols, and the financial impact of such an event through business
interruption and other insurances.

Financial risks and uncertainties

The Group’s reporting currency is the euro but it transacts in foreign
currencies and consolidates the results of non-euro reporting foreign
operations. Fluctuations in value between the euro and these currencies
may affect the Group’s revenues, costs and operating profits. The Group
seeks to mitigate currency and interest rate risks, where appropriate,
through hedging and structured financial contracts to hedge a portion of
its foreign currency transaction exposure and to fix a portion of its
variable rate interest exposure. The Group seeks to partially manage
foreign currency translation risk in relation to its US dollar
subsidiaries through borrowings denominated in US dollar which are
designated as a net investment hedge. It has not entered into structured
financial contracts to hedge its translation exposure on its foreign
acquisitions.

The solvency of the Group’s defined benefit pension schemes may be
affected by a fall in the value of their investments, market and
interest rate volatility and other economic and demographic factors.
Each of these factors may require the Group to increase its contribution
levels. The Group seeks to mitigate this risk by continuous monitoring,
taking professional advice on the optimisation of asset returns within
agreed acceptable risk tolerances and implementing liability-management
initiatives such as the reduction in member contractual benefits
approved by the Pensions Board in February 2012.

Fiscal, regulatory and political risks and uncertainties

The Group may be adversely affected by changes in excise duty or
taxation on cider and beer in Ireland, the UK, the US and other
territories. The Group is not able to materially mitigate this risk,
which is outside its control.

The Group may be adversely affected by changes in government regulations
affecting alcohol pricing, sponsorship or advertising, and product
types. Within the context of supporting responsible drinking
initiatives, the Group supports the work of its trade associations to
present the industry’s case to government.

In September 2014 a referendum is to be held in Scotland as to its
continued membership of the UK. At the date of this report the outcome
cannot be predicted. Were the vote to go in favour of independence, a
further period of uncertainty would occur. Significant issues would
arise including currency, tax rates, investment and membership of the
EU. The economic implications for the Group cannot yet be quantified,
but are likely to be mixed. A lengthy period of uncertainty would be
unhelpful for forward investment. The Group is carefully monitoring the
debate on relevant issues and will formulate its strategy accordingly.

Liability-related risks and uncertainties

The Group’s operations are subject to extensive regulation, including
stringent environmental, health and safety and food safety laws and
regulations and competition law. Legislative non-compliance or adverse
ethical practices could lead to prosecutions and damage to the
reputation of the Group and its brands. The Group has in place a
permanent legal and compliance monitoring and training function and an
extensive programme of corporate responsibility.

The Group is vulnerable to contamination of its products or base raw
materials, whether accidental, natural or malicious. Contamination could
result in a recall of the Group’s products, damage to brand image and
civil or criminal liability. The Group has established protocols and
procedures for incident management and product recall and mitigates the
financial impact by appropriate insurance cover.

Fraud, corruption and theft against the Group whether by employees,
business partners or third parties are risks, particularly as the Group
develops internationally. The Group maintains appropriate internal
controls and procedures to guard against economic crime and imposes
appropriate monitoring and controls on subsidiary management.

Employment-related risks and uncertainties

The Group’s continued success is dependent on the skills and experience
of its executive Directors and other high-performing personnel,
including those in newly acquired businesses, and could be affected by
their loss or the inability to recruit or retain them. The Group seeks
to mitigate this risk through appropriate remuneration policies and
succession planning.

Whilst relations with employees are generally good, work stoppages or
other industrial action could have a material adverse effect on the
Group. The Group seeks to ensure good employee relations through
engagement and dialogue.

Items that will not be reclassified to profit or loss in
subsequent years:

Actuarial loss on retirement benefit obligations

12

(6.4)

(13.0)

Deferred tax on actuarial loss on retirement benefit obligations

0.7

1.6

Net profit/(loss) recognised directly within other comprehensive
income

10.1

(21.0)

Profit for the year attributable to equity shareholders

83.3

89.4

Comprehensive income for the year attributable to equity
shareholders

93.4

68.4

GROUP CONDENSED BALANCE SHEET

As at 28 February 2014

2014

2013

Notes

€m

€m

ASSETS

Non-current assets

Property, plant & equipment

218.9

183.6

Goodwill & intangible assets

721.9

707.2

Equity-accounted investees

15.0

2.4

Retirement benefit obligations

12

1.4

0.5

Deferred tax assets

4.7

6.2

Derivative financial instruments

1.9

1.4

Trade & other receivables

40.9

31.3

1,004.7

932.6

Current assets

Inventories

72.2

48.9

Trade & other receivables

139.6

96.1

Derivative financial instruments

1.2

1.7

Cash & cash equivalents

162.8

121.0

375.8

267.7

TOTAL ASSETS

1,380.5

1,200.3

EQUITY

Equity share capital

3.5

3.4

Share premium

115.8

107.9

Other reserves

63.9

48.6

Treasury shares

(10.3)

(12.5)

Retained income

679.2

632.3

Total equity

852.1

779.7

LIABILITIES

Non-current liabilities

Interest bearing loans & borrowings

307.9

244.4

Derivative financial instruments

1.3

1.2

Retirement benefit obligations

12

22.8

22.0

Provisions

8.8

9.4

Deferred tax liabilities

6.6

7.8

347.4

284.8

Current liabilities

Interest bearing loans & borrowings

0.1

-

Derivative financial instruments

1.2

-

Trade & other payables

171.3

124.1

Provisions

2.7

2.8

Current tax liabilities

5.7

8.9

181.0

135.8

Total liabilities

528.4

420.6

TOTAL EQUITY & LIABILITIES

1,380.5

1,200.3

GROUP CONDENSED CASHFLOW STATEMENT

For the year ended 28 February 2014

2014

2013

(restated)

Notes

€m

€m

CASH FLOWS FROM OPERATING ACTIVITIES

Profit for the year attributable to equity shareholders

83.3

89.4

Finance income

-

(0.1)

Finance expense

11.0

5.0

Income tax expense

12.2

15.7

Depreciation of property, plant & equipment

23.8

21.6

Amortisation of intangible assets

0.2

0.1

Net loss on disposal of property, plant & equipment

1.2

-

Share of equity accounted investees’ profit after tax

(0.5)

-

Charge for share-based employee benefits

0.8

3.0

Pension contributions paid less amount charged to income statement

(6.3)

(6.6)

125.7

128.1

Decrease/(increase) in inventories

3.6

(0.7)

Increase in trade & other receivables

(13.0)

(14.8)

Decrease in trade & other payables

(2.9)

(18.4)

Decrease in provisions

(1.3)

(4.9)

112.1

89.3

Interest received

-

0.1

Interest and similar costs paid

(8.3)

(2.0)

Income taxes paid

(13.7)

(8.5)

Net cash inflow from operating activities

90.1

78.9

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant & equipment

(38.5)

(24.1)

Net proceeds on disposal of property, plant & equipment

10.0

-

Acquisition of brand/deferred consideration paid on acquisition of
brand

-

(3.7)

Acquisition of business

10

(8.6)

(229.8)

Acquisition of equity accounted investee(s)

10

(12.0)

(2.9)

Net cash outflow from investing activities

(49.1)

(260.5)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from exercise of share options

5.0

3.5

Proceeds from issue of new shares following acquisition of subsidiary

-

5.3

Net proceeds from sale of shares held by Employee Trust

1.2

6.6

Drawdown of debt

76.2

251.2

Repayment of debt

(57.3)

(65.2)

Payment of issue costs

-

(2.8)

Dividends paid

(27.9)

(21.2)

Net cash (outflow)/inflow from financing activities

(2.8)

177.4

Net increase/(decrease) in cash & cash equivalents

38.2

(4.2)

Cash & cash equivalents at beginning of year

121.0

128.3

Translation adjustment

3.6

(3.1)

Cash & cash equivalents at end of year

162.8

121.0

A reconciliation of cash & cash equivalents to net debt is presented in
note 11.

GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY

For the year ended 28 February 2014

Equity

share

capital

Share

premium

Capital

redemption

reserve

Capital

reserve

Cash flow

hedging

reserve

Share-based

payments

reserve

Currency

translation

reserve

Revaluation

reserve

Treasury

shares

Retained

income

(restated)

Total

€m

€m

€m

€m

€m

€m

€m

€m

€m

€m

€m

At 29 February 2012

3.4

92.0

0.5

24.9

(0.5)

7.2

21.9

3.8

(16.8)

577.8

714.2

Profit for the year attributable to equity shareholders

-

-

-

-

-

-

-

-

-

89.4

89.4

Other comprehensive income/ (expense)

-

-

-

-

1.7

-

(11.3)

-

-

(11.4)

(21.0)

Sub-total

-

-

-

-

1.7

-

(11.3)

-

-

78.0

68.4

Dividend on ordinary shares

-

7.1

-

-

-

-

-

-

-

(28.4)

(21.3)

Exercised share options

-

3.5

-

-

-

-

-

-

-

-

3.5

Reclassification of share-based payments reserve

-

-

-

-

-

(2.2)

-

-

-

2.2

-

Issue of shares following acquisition of subsidiary

-

5.3

-

-

-

-

-

-

-

-

5.3

Joint Share Ownership Plan

-

-

-

-

-

(0.4)

-

-

0.4

-

-

Sale of shares held by Employee Trust

-

-

-

-

-

-

-

-

3.9

2.7

6.6

Equity settled share-

based payments

-

-

-

-

-

3.0

-

-

-

-

3.0

Sub-total

-

15.9

-

-

-

0.4

-

-

4.3

(23.5)

(2.9)

At 28 February 2013

3.4

107.9

0.5

24.9

1.2

7.6

10.6

3.8

(12.5)

632.3

779.7

Profit for the year attributable to equity shareholders

-

-

-

-

-

-

-

-

-

83.3

83.3

Other comprehensive income/ (expense)

-

-

-

-

(1.2)

-

17.0

-

-

(5.7)

10.1

Sub-total

-

-

-

-

(1.2)

-

17.0

-

-

77.6

93.4

Dividend on ordinary shares

-

3.0

-

-

-

-

-

-

-

(31.0)

(28.0)

Exercised share options

0.1

4.9

-

-

-

-

-

-

-

-

5.0

Reclassification of share-based payments reserve

-

-

-

-

-

(1.2)

-

-

-

1.2

-

Joint Share Ownership Plan

-

-

-

-

-

(0.1)

-

-

0.1

-

-

Sale of shares held by Employee Trust

-

-

-

-

-

-

-

-

2.1

(0.9)

1.2

Equity settled share-

based payments

-

-

-

-

-

0.8

-

-

-

-

0.8

Sub-total

0.1

7.9

-

-

-

(0.5)

-

-

2.2

(30.7)

(21.0)

At 28 February 2014

3.5

115.8

0.5

24.9

-

7.1

27.6

3.8

(10.3)

679.2

852.1

NOTES TO THE PRELIMINARY ANNOUNCEMENT

1. BASIS OF PREPARATION

The financial information presented in this report has been prepared in
accordance with the Listing Rules of the Irish Stock Exchange and the UK
Listing Authority and the accounting policies that the Group has adopted
under International Financial Reporting Standards (IFRS) as approved by
the European Union and issued by the International Accounting Standards
Board (IASB) for the financial year ended 28 February 2014.

2.STATUTORY ACCOUNTS

The financial information prepared in accordance with IFRSs as adopted
by the European Union included in this report does not comprise “full
group accounts” within the meaning of Regulation 40(1) of the European
Communities (Companies: Group Accounts) Regulations, 1992 of Ireland
insofar as such group accounts would have to comply with the disclosure
and other requirements of those Regulations. Full statutory accounts for
the year ended 28 February 2014 prepared in accordance with IFRS, upon
which the auditors have given an unqualified report, have not yet been
filed with the Registrar of Companies. Full accounts for the year ended
28 February 2013, prepared in accordance with IFRS and containing an
unqualified audit report have been delivered to the Registrar of
Companies.

The information included has been extracted from the Group’s financial
statements, which have been approved by the Board of Directors on 20 May
2014.

3. REPORTING CURRENCY

The Group's financial statements are presented in euro millions to one
decimal place. The results of the Group's subsidiaries with non-euro
functional currencies have been translated into euro at average exchange
rates for the year with the related balance sheets consolidated using
the closing rate at the balance sheet date. Foreign currency movements
arising on restatement of the results and opening net assets of non-euro
functional currency companies at closing rates are recognised in the
Currency Translation Reserve via the Statement of Comprehensive Income,
together with currency movements arising on foreign currency borrowings
designated as net investment hedges and currency movements arising on
retranslation of the Group's long term sterling and US dollar intra
group loans which are considered quasi equity in nature and part of the
Group’s net investment in its foreign operations.

The exchange rates used in translating sterling and US dollar balance
sheet and income statement amounts were as follows:-

2014

2013

Balance Sheet (closing rate):

Euro:Stg£

£0.821

£0.867

Income Statement (average rate):

Euro:Stg£

£0.846

£0.813

Balance Sheet (closing rate):

Euro:US$

$1.370

$1.315

Income Statement (average rate):

Euro:US$

$1.334

$1.290

4. PRIOR YEAR ADJUSTMENT

The Group has applied the revised accounting standard IAS 19 Employee
Benefits in the current financial year. This affects the accounting for
defined benefit pension schemes. Under the revised standard, the
interest on scheme assets is accounted for using the same discount rate
as is used in measuring scheme obligations as part of the income
statement charge, net interest on net defined liability. The prior year
comparative figures have been restated as though this revision had also
been applied in the prior year.

The implementation of IAS19 revised Employee Benefits had no impact on
total Comprehensive income for the year attributable to equity
shareholders for the year ended 28 February 2013, but it did increase
the Profit for the year attributable to equity shareholders by €0.7m in
the income statement, and increase actuarial losses on defined benefit
pension obligations by €0.7m within other comprehensive income and
expense in the Group Statement of Comprehensive Income as outlined in
the table below. There is no impact on the balance sheet.

The table below details the impact of the implementation of the revised
accounting standard IAS 19 Employee Benefits on both the current and
prior year results.

Financial year ended 28 February 2013

Operating

costs

Operating

profit

Actuarial loss

on retirement

benefit

obligations

Other

comprehensive

income &

expense

Total

comprehensive

income

€m

€m

€m

€m

€m

Previously reported – under IAS 19

(367.6)

109.3

(12.3)

(20.3)

68.4

Impact of change

0.7

0.7

(0.7)

(0.7)

-

Currently reported – under IAS 19(R)

(366.9)

110.0

(13.0)

(21.0)

68.4

Financial year ended 28 February 2014

Operating

costs

Operating

profit

Actuarial loss

on retirement

benefit

obligations

Other

comprehensive

income &

expense

Total

comprehensive

income

€m

€m

€m

€m

€m

Under IAS 19

(515.3)

104.9

(5.3)

11.2

93.4

Impact of change

1.1

1.1

(1.1)

(1.1)

-

As reported - under IAS 19(R)

(514.2)

106.0

(6.4)

10.1

93.4

5. SEGMENTAL REPORTING

The Group’s business activity is the manufacturing, marketing and
distribution of beverage products, primarily branded beer and cider.
Following the current year acquisition of the Gleeson group, the Group’s
activity has broadened to include the distribution of wine and the
manufacture, marketing and distribution of Finches soft drinks and
Tipperary Water. Five reporting segments have been identified; Republic
of Ireland (‘ROI’), Cider United Kingdom (‘Cider UK’), Tennent’s United
Kingdom (‘Tennent’s UK’), International, and Third Party Brands United
Kingdom (‘Third Party Brands UK’).

The basis of segmentation corresponds with the Group’s organisation
structure, the current year nature of reporting lines to the Chief
Operating Decision-Maker (‘CODM’ as defined in IFRS 8 Operating
Segments), and the Group’s internal reporting for the purpose of
managing the business, assessing performance and allocating resources.
The acquired M. & J. Gleeson (Investments) Limited and its subsidiaries
(‘Gleeson’) is included within the ROI reporting segment on the basis
that the nature of the products sold, the production and distribution
processes and the customers are all similar. The business has been
integrated with the Group’s existing ROI business with both businesses
managed on a consolidated basis by a newly appointed Managing Director.
In addition, all accounting, HR and IT support services as well as sales
and marketing functions are shared by the integrated ROI business.

The CODM, identified as the executive Directors comprising Stephen
Glancey, Kenny Neison and, from 23 October 2012, Joris Brams (since
October 2012), assesses and monitors the operating results of segments
separately via internal management reports in order to effectively
manage the business and allocate resources. Segment performance is
predominantly evaluated based on Revenue, Net revenue and Operating
profit before exceptional items and therefore these are the most
relevant indicators in evaluating the results of the Group’s reporting
segments. Given that net finance costs and income tax are managed on a
centralised basis, these items are not allocated between operating
segments for the purposes of the information presented to the CODM and
are accordingly omitted from the detailed segmental analysis below.

The identified reporting segments are as follows:-

(i) ROI

This segment includes the financial results from sale of the Group’s own
branded products in the Republic of Ireland (‘ROI’), principally
Bulmers, Tennent’s, Caledonia Smooth, Finches and Tipperary Water. It
also includes the financial results from beer and wines & spirits
distribution and wholesaling following the acquisition of Gleeson and
the results from sale of third party brands as permitted under the terms
of a distribution agreement with AB InBev.

(ii) Cider UK

This segment includes the results from sale of the Group’s own branded
cider products in the UK, with Magners, Gaymers and Blackthorn the
principal brands.

(iii) Tennent’s UK

This segment includes the results from sale of the Group’s own branded
beer brands in the UK, with Tennent’s and Caledonia Best the principal
brands.

(iv) International

This segment includes the results from sale of the Group’s own branded
cider and beer products, principally Woodchuck, Magners, Gaymers,
Hornsby’s, Blackthorn, and Tennent’s in all territories outside of the
ROI and the UK.

(v) Third Party Brands UK

This segment relates to the distribution of third party brands and the
production and distribution of private label products in the UK. It also
includes sales of the Group’s wine brands in the UK.

Information regarding the results of each reportable segment is
disclosed below. The analysis by segment includes both items directly
attributable to a segment and those, including central overheads, which
are allocated on a reasonable basis in presenting information to the
CODM.

Inter-segmental revenue is not material and thus not subject to separate
disclosure.

Segment capital expenditure is the total amount incurred during the year
to acquire segment assets, excluding those assets acquired in business
combinations that are expected to be used for more than one accounting
period.

(a) Reporting segment disclosures

2014

2013

Revenue

€m

Net revenue

€m

Operating profit

€m

Revenue

€m

Net revenue

€m

Operating profit (restated)

€m

ROI

330.6

237.3

48.2

133.8

92.2

38.7

Cider UK

164.1

112.8

20.7

195.8

137.8

31.3

Tennent’s UK

216.2

103.6

34.6

229.3

108.9

30.3

International

79.9

77.1

16.0

48.5

47.8

9.2

Third party brands UK

122.1

89.4

7.2

116.7

90.2

5.1

Total before exceptional items

912.9

620.2

126.7

724.1

476.9

114.6

Exceptional items (note 7)

-

-

(20.7)*

-

-

(4.6) **

Total

912.9

620.2

106.0

724.1

476.9

110.0

* Of the exceptional loss in the current year, €8.9m loss relates to
ROI, €7.8m loss to Cider UK, €1.5m loss to Tennent’s UK, €2.0m loss to
International and a €0.5m loss remains unallocated.

** Of the exceptional loss in the prior year, €1.3m gain relates to ROI,
€0.8m loss to Cider UK, €0.5m loss to Tennent’s UK, €2.6m loss to
International and a €2.0m loss remains unallocated.

(b) Other operating segment information

2014

2013

Capital expenditure

€m

Depreciation/ amortization

€m

Capital expenditure

€m

Depreciation/ amortization

€m

ROI

3.0

5.2

2.2

3.3

Cider UK

7.6

8.4

10.3

8.6

Tennent’s UK

9.2

8.5

8.7

8.3

International

20.0

1.7

3.1

1.2

Third party brands UK

-

0.2

-

0.3

Total

39.8

24.0

24.3

21.7

(c) Geographical analysis of revenue and net revenue

Revenue

Net revenue

2014

€m

2013

€m

2014

€m

2013

€m

Republic of Ireland

330.6

133.8

237.3

92.2

United Kingdom

502.4

541.8

305.8

336.9

Rest of Europe

12.8

14.2

12.8

14.2

North America

57.8

29.9

55.2

29.2

Rest of World

9.3

4.4

9.1

4.4

Total

912.9

724.1

620.2

476.9

The geographical analysis of revenue and net revenue is based on the
location of the third party customers.

(d) Geographical analysis of non-current assets

ROI

€m

UK

€m

Rest of Europe

€m

North America

€m

Rest of World

€m

Total

€m

28 February 2014

Property, plant & equipment

64.6

126.6

5.4

22.2

0.1

218.9

Goodwill & intangible assets

136.6

329.2

8.3

242.2

5.6

721.9

Equity-accounted investees

-

15.0

-

-

-

15.0

Retirement benefit obligations

-

1.4

-

-

-

1.4

Deferred tax assets

3.7

-

-

1.0

-

4.7

Derivative financial instruments

-

1.4

0.5

-

-

1.9

Trade & other receivables

0.4

40.5

-

-

-

40.9

Total

205.3

514.1

14.2

265.4

5.7

1,004.7

ROI

€m

UK

€m

Rest of Europe

€m

North America

€m

Rest of World

€m

Total

€m

28 February 2013

Property, plant & equipment

54.1

123.9

-

5.6

-

183.6

Goodwill & intangible assets

120.3

322.8

7.1

251.4

5.6

707.2

Equity-accounted investees

-

2.4

-

-

-

2.4

Retirement benefit obligations

-

0.5

-

-

-

0.5

Deferred tax assets

5.2

-

-

1.0

-

6.2

Derivative financial instruments

-

1.4

-

-

-

1.4

Trade & other receivables

0.5

30.8

-

-

-

31.3

Total

180.1

481.8

7.1

258.0

5.6

932.6

The geographical analysis of non-current assets, with the exception of
Goodwill & intangible assets, is based on the geographical location of
the assets. The geographical analysis of Goodwill & intangible assets is
allocated based on the country of destination of sales at date of
application of IFRS 8 Operating Segments or date of acquisition, if
later.

6. CYCLICALITY OF OPERATIONS

Operating profit performance in the drinks industry is not characterised
by significant cyclicality. Operating profit before exceptional items
for the financial year ended 28 February 2014 was split H1: 56% and H2:
44%.

Restructuring costs, comprising severance and other initiatives
following the acquisition and integration of M. & J. Gleeson
(Investments) Limited (“Gleeson”) and its subsidiaries with the Group’s
existing business and cost cutting initiatives undertaken at the Group’s
manufacturing facilities resulted in an exceptional charge before tax of
€6.7m in the current financial year. This charge is reduced by a defined
benefit pension scheme curtailment gain of €0.6m due to the reduction in
headcount numbers and the reclassification of these employees from
active to deferred members. A curtailment gain arises where the value of
the pension benefit of a deferred member is less than that of an active
member. In the previous financial year, the Group incurred restructuring
costs of €1.2m arising from cost cutting initiatives and the
consolidation of the Group’s offices in the UK and the US.

(b) Acquisition costs

During the current financial year, the Group incurred €1.1m of costs
directly attributable to the current year acquisitions of Gleeson and
Biofun and the prior year acquisition of VHCC. These costs primarily
relate to professional fees directly incurred in relation to the
completion of these acquisitions. Prior year acquisition costs of €3.3m
related to the acquisition of VHCC and the pending acquisition of
Gleeson which completed on 7 March, 2013.

(c) Integration costs including write-off of redundant legacy IT
assets

During the current financial year, the Group incurred external
consultant fees and other costs associated with the integration of the
acquired Gleeson and VHCC businesses with the Group’s existing business.
In addition, the Group wrote off redundant IT assets as a consequence of
streamlining its IT system requirements following the acquisition and
integration of both the Gleeson and VHCC businesses with the Group’s
existing business. In the prior year, the Group incurred external
consultant fees and other costs associated with the integration of the
Hornsby’s brand.

(d) Recovery of previously impaired inventory

During the financial year ended 28 February 2009, the Group’s stock
holding of apple juice at circa 36 months of forecasted future sales was
deemed excessive in light of anticipated future needs, forward purchase
commitments and useful life of the stock on hand. Accordingly the Group
recorded an impairment charge in relation to excess apple juice stocks.
During the previous financial year, some of the previously impaired
juice stocks were recovered and used by the Group. As a result this
stock was written back to operating profit in that year at its
recoverable value resulting in a gain of €1.0m (2014: nil). The Group
has recovered total juice inventory of €1.9m for which an impairment
charge was recognised in FY2009.

(e) Redeployment of bottling line

In the current financial year, a bottling line was redeployed from the
Group’s Clonmel cider manufacturing plant to its Shepton Mallet cider
manufacturing plant and costs of €6.6m were incurred in this regard. As
a result of this deployment an existing PET line with a value of €0.8m
in Shepton Mallet became redundant and was written off.

(f) Other

During the current financial year, the Group incurred costs of €0.8m in
relation to upgrading its listing on the Official List of the UK Listing
Authority from a standard listing to a premium listing. Also included
within Other in the current financial year is a release of €0.3m with
respect to an excess exit provision following the expiration of an
onerous lease which originally arose from the consolidation of the
Group’s Dublin offices in a previous financial year.

8. DIVIDENDS

2014

€m

2013

€m

Dividends paid:

Final: paid 4.75c per ordinary share in July 2013 (2013: 4.5c paid
in July 2012)

16.3

15.0

Interim: paid 4.3c per ordinary share in December 2013 (2013: 4.0c
paid in December 2012)

14.7

13.4

Total equity dividends

31.0

28.4

Settled as follows:

Paid in cash

27.9

21.2

Accrued with respect to LTIP (Part I) dividend entitlements

0.1

0.1

Scrip dividend

3.0

7.1

31.0

28.4

The Directors have proposed a final dividend of 5.7 cent per share
(2013: 4.75 cent), to ordinary shareholders registered at the close of
business on 30 May 2014, which is subject to shareholder approval at the
Annual General Meeting, giving a proposed total dividend for the year of
10.0 cent per share (2013: 8.75 cent). Using the number of shares in
issue at 28 February 2014 and excluding those shares for which it is
assumed that the right to dividend will be waived, this would equate to
a distribution of €19.7m.

In order to achieve better alignment of the interest of share based
remuneration awards with the interests of shareholders, shareholder
approval was given at the 2012 AGM to a proposal that awards made in or
after 2012 and that vest under the LTIP (Part I) incentive programme
should reflect the equivalent value to that which accrues to
shareholders by way of dividends during the vesting period. An amount of
€0.1m was accrued during the current financial year in this regard.

Total dividends of 9.05 cent per ordinary share were recognised as a
deduction from the retained income reserve in the year ended 28 February
2014 (2013: 8.5 cent).

Final dividends on ordinary shares are recognised as a liability in the
financial statements only after they have been approved at an annual
general meeting of the Company. Interim dividends on ordinary shares are
recognised when they are paid.

9. EARNINGS PER SHARE

Denominator computations

2014

Number

‘000

2013

Number

‘000

Number of shares at beginning of year

344,332

339,275

Shares issued in lieu of dividend

664

1,934

Shares issued following acquisition of subsidiary

-

1,422

Shares issued in respect of options exercised

1,844

1,701

Number of shares at end of year

346,840

344,332

Weighted average number of ordinary shares (basic)*

337,154

329,067

Adjustment for the effect of conversion of options

6,011

7,135

Weighted average number of ordinary shares, including options
(diluted)

343,165

336,202

* excludes 7.6m treasury shares (2013: 8.3m)

Profit attributable to ordinary shareholders

2014

€m

2013

(restated)

€m

Earnings as reported

83.3

89.4

Adjustment for exceptional items, net of tax (note 7)

17.8

4.3

Earnings as adjusted for exceptional items, net of tax

101.1

93.7

Basic earnings per share

Cent

Cent

Basic earnings per share

24.7

27.2

Adjusted basic earnings per share

30.0

28.5

Diluted earnings per share

Diluted earnings per share

24.3

26.6

Adjusted diluted earnings per share

29.5

27.9

Basic earnings per share is calculated by dividing the profit
attributable to the ordinary shareholders by the weighted average number
of ordinary shares in issue during the year, excluding ordinary shares
purchased/issued by the Company and accounted for as treasury shares (at
28 February 2014: 7.6m shares; at 28 February 2013: 8.3m shares).

Diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion of
all potential dilutive ordinary shares. The average market value of the
Company’s shares for purposes of calculating the dilutive effect of
share options was based on quoted market prices for the period of the
year that the options were outstanding.

Employee share awards (excluding those plans which under their rules
must be satisfied by the purchase of existing shares), which are
performance-based are treated as contingently issuable shares because
their issue is contingent upon satisfaction of specified performance
conditions in addition to the passage of time and continuous employment.
In accordance with IAS 33 Earnings per Share, these contingently
issuable shares are excluded from the computation of diluted earnings
per share where the vesting conditions would not have been satisfied as
at the end of the reporting period (1,367,350 at 28 February 2014 and
1,927,156 at 28 February 2013). If dilutive other contingently issuable
ordinary shares are included in diluted EPS based on the number of
shares that would be issuable if the end of the reporting period was the
end of the contingency period.

10. BUSINESS COMBINATIONS

Acquisition of businesses

During the current financial year, the Group completed the following two
acquisitions:

• The acquisition of M. & J. Gleeson (Investments) Limited (“Gleeson”)
and its subsidiaries, a supplier and distributor of beverages in Ireland
was completed on 7 March 2013. The consideration for the acquisition was
€12.4m payable in cash, of which €4.4m was deferred for one year. The
deferred consideration was paid post year end. As part of this
transaction the Group acquired an interest in The Irish Brewing Company
Limited , a non-trading company (45.6% of issued Ordinary shares) and
Beck & Scott (Services) Limited, a distributor of beverages in Northern
Ireland (50% of the issued Ordinary shares and 40% of the issued B
Ordinary shares). The value of these associated companies was less than
€0.1m at date of acquisition.

• On 2 August 2013, August 2013 the Group acquired Latin American
Holdings Limited, together with its subsidiary Biofun Produtos
Biológicos do Fundão, Lda (“Biofun”), a manufacturer of apple juice
concentrate based in the district of Castelo
Branco, Portugal for €0.1m. The acquisition assists in securing
future supplies of concentrate. Under the terms of the agreement, a
derivative financial asset in relation to a call option granted to the
Group enabling it to purchase trees and orchard maintenance equipment
for a nominal price on the tenth anniversary of the acquisition was also
acquired. The derivative financial asset was valued by the Group at
€0.5m.

During the previous financial year, the Group completed the acquisition
of Vermont Hard Cider Company, LLC (“VHCC”) in the United States for a
gross consideration of €230.9m ($305.0m). The transaction was completed
on 21 December 2012. A working capital settlement of €0.5m, accrued at
28 February 2013 was paid in the current financial year bringing the
total working capital settlement to €2.8m ($3.7m or €2.8m euro
equivalent at date of transaction and subsequent payment date). The
working capital settlement reflects an amount payable over and above the
contractual purchase price reflecting ‘normalised working capital’ as
set out in the purchase agreement.

Also during the previous financial year, the Group acquired a 92.5%
equity holding in The Five Lamps Dublin Beer Company Limited, an Irish
craft brewer. The transaction was completed on 4 September 2012 for an
investment of less than €0.1m. The company had nominal assets and
liabilities at date of acquisition. In line with Article 12 of the
Articles of Association of the company, the voting, dividend and
repayment of capital rights of B Ordinary Shares shall carry a certain
percentage of the aggregate voting rights of all the members depending
on the number of milestones achieved by the member holding the B
Ordinary Shares. During the current financial year, the first milestone
was considered to have been achieved and the ‘B’ ordinary shares, all of
which are held by the minority shareholder, attracted additional voting,
dividend and repayment of capital rights of 2.5% resulting in the
Group’s ownership reducing to 90% and the minority shareholder’s
increasing to 10%. Post year end, the second milestone was considered to
have been achieved resulting in the Group’s ownership reducing to 87.5%
and the minority shareholder’s increasing to 12.5%.

The book values of the assets and liabilities acquired, from the
transactions outlined above, together with the initial fair value
adjustments made to those carrying values, was as follows:-

Gleeson

Initial value assigned

Adjustment to initial fair value

Revised fair value

€m

€m

€m

Property, plant & equipment

49.1

(29.2)

19.9

Other intangible assets

-

1.8

1.8

Inventories

29.5

(3.9)

25.6

Trade & other receivables

35.8

(3.0)

32.8

Trade & other payables

(34.7)

(0.6)

(35.3)

Interest bearing loans & borrowings

(47.9)

-

(47.9)

Deferred tax (liability)/asset

(1.2)

2.1

0.9

Net identifiable assets and liabilities acquired

30.6

(32.8)

(2.2)

Goodwill arising on acquisition

14.6

12.4

Consideration transferred/transferable:

Cash consideration paid

8.0

Deferred consideration

4.4

Total consideration

12.4

Biofun

Initial value assigned

Adjustment to initial fair value

Revised fair value

€m

€m

€m

Property, plant & equipment

5.6

(1.0)

4.6

Derivative financial asset

-

0.5

0.5

Inventories

0.4

(0.2)

0.2

Trade & other receivables

1.8

(0.1)

1.7

Trade & other payables

(4.4)

0.1

(4.3)

Interest bearing loans & borrowings

(3.6)

-

(3.6)

Deferred tax liability

-

(0.2)

(0.2)

Net identifiable assets and liabilities acquired

(0.2)

(0.9)

(1.1)

Goodwill arising on acquisition

1.2

Total consideration paid

0.1

VHCC – February 2013

Initial value assigned

Adjustment to fair value

Revised fair value

€m

€m

€m

Property, plant & equipment

3.0

0.7

3.7

Brands & other intangible assets

1.2

157.8

159.0

Financial asset

0.2

(0.2)

-

Inventories

2.8

-

2.8

Trade & other receivables

3.0

-

3.0

Cash and cash equivalents

3.4

-

3.4

Trade & other payables

(2.6)

-

(2.6)

Deferred tax liability

-

(0.2)

(0.2)

Net identifiable assets and liabilities acquired

11.0

158.1

169.1

Goodwill arising on acquisition

64.6

233.7

Consideration transferred/transferable:

Cash consideration paid

230.9

Working capital – initial payment

2.3

Working capital settlement, paid in the current financial year

0.5

Total consideration

233.7

Net cash outflow arising on acquisition

Cash consideration paid and working capital settlement paid year
ended 28 February 2013

233.2

Less: cash & cash equivalents acquired

(3.4)

Net cash outflow FY2013

229.8

Working capital settlement, paid in current financial year

0.5

Net cash outflow FY2014

0.5

The post acquisition impact of acquisitions completed during the current
financial year on Group Operating profit for the current financial year
and the post acquisition impact of acquisitions completed during the
financial year ended 28 February 2013 on Group Operating profit for that
financial year were as follows:-

2014

2013

€m

€m

Revenue

185.1

6.7

Excise duties

(42.0)

(0.3)

Net revenue

143.1

6.4

Operating costs

(137.8)

(4.6)

Operating profit

5.3

1.8

Income tax expense

(0.5)

-

Results from acquired businesses

4.8

1.8

Acquisition costs of €1.1m (2013: €3.3m) have been shown in exceptional
operating costs in the income statement. These costs are directly
attributable to the current year acquisitions of Gleeson and Biofun and
the prior year acquisition of VHCC. The Group also incurred exceptional
integration and restructuring costs as a result of the acquisitions of
Gleeson and Biofun as outlined in note 7.

The Gleeson business was acquired on 7 March 2013 and consequently the
consolidated financial results for Gleeson represent this business’
financial results for the full financial year. The Biofun business was
acquired on 2 August 2013, all fruit concentrate produced by the
acquired business is used internally, and consequently no external
revenue or net revenue is generated. The business made a profit of €0.1m
in the period since acquisition. The revenue, net revenue and operating
profit of the Group for the financial year determined in accordance with
IFRS as though the acquisitions effected during the year had been at the
beginning of the year would therefore not have been materially different
from that reported. All intra group balances, transactions, income and
expenses are eliminated on consolidation in accordance with IAS 27
Consolidated Financial Statements.

Acquisition of equity accounted investees

On 22 March 2013, the Group acquired 50% of the equity share capital of
Wallaces Express Limited (“Wallaces”), Scotland’s largest wines and
spirits wholesaler, for €11.8m. Under the terms of this agreement, the
Group entered into a call option arrangement enabling it to serve notice
on Wallaces shareholders to acquire the remaining 50% of Wallaces at a
predetermined price on 20 March 2015 or earlier at the Group’s option in
the event of a breach of warranty by the Seller; and a put option
granting Wallaces’ shareholders the right to serve notice on the Group
to acquire the remaining 50% during the period January 2015 to March
2015 or earlier at the Sellers option in the event of a change of
control, listing or insolvency of the buying company. The related
derivative financial asset was valued at €1.2m while the related
derivative financial liability was valued at €1.2m.

Post year end, on 18 March 2014, under the terms of a new agreement the
Group acquired the remaining 50% of Wallaces, further details are
provided in note 14.

The net identifiable assets and liabilities of Wallaces on date of
acquisition of 50% of the equity share capital, 22 March 2013, together
with the Group’s latest estimate of fair value adjustments are as
outlined below:

Wallaces

Initial value assigned

Adjustment to initial fair value

Revised fair value

€m

€m

€m

Property, plant & equipment

3.7

-

3.7

Brands & other intangible assets

1.4

(1.1)

0.3

Inventories

10.8

-

10.8

Trade & other receivables – current

12.4

-

12.4

Cash & cash equivalents

3.0

-

3.0

Current tax asset/(liability)

0.3

(0.3)

-

Trade & other payables

(14.1)

(0.3)

(14.4)

Bank debt

(0.3)

-

(0.3)

Deferred tax liability

(0.1)

-

(0.1)

Net identifiable assets and liabilities on date of acquisition

17.1

(1.7)

15.4

The Group’s share of net identifiable assets and liabilities on
date of acquisition

7.7

Derivative financial asset arising on acquisition

1.2

Derivative financial liability arising on acquisition

(1.2)

Goodwill (classified within Equity accounted investees)

4.1

Total consideration paid

11.8

Acquisition costs paid

0.2

Equity accounted investees

12.0

Contribution in the year from date of investment to 28 February 2014 was
€0.6m. Acquisition costs of €0.2m incurred with respect to this
transaction are capitalised within Equity accounted investees on the
Balance Sheet. The total carrying value of the investment at 28 February
2014 was €12.6m.

During the previous financial year, the Group also acquired a 25% equity
investment in Maclay Group plc, a leading independent Scottish operator
of managed public houses for €2.5m. The business primarily includes the
operation of 15 wholly owned managed houses and 11 managed houses owned
by two separate Enterprise Investment Schemes. The total carrying value
of the investment, excluding related derivative financial instruments,
at 28 February 2014 was €2.0m (2013: €1.9m).

In addition, during the financial year ended 28 February 2013, the Group
invested €0.4m in a joint venture with Maclay Group plc in Thistle Pub
Company Limited. The total carrying value of this investment, excluding
related derivative financial instruments, at 28 February 2014 was €0.4m
(2013: €0.5m).

11. ANALYSIS OF NET DEBT

1 March 2013

Translation adjustment

Debt arising on acquisition

Cash flow

Non-cash changes

28 February 2014

€m

€m

€m

€m

€m

€m

Group

Interest bearing loans & borrowings

244.4

(7.3)

51.5

18.9

0.5

308.0

Cash & cash equivalents

(121.0)

(3.6)

-

(38.2)

-

(162.8)

123.4

(10.9)

51.5

(19.3)

0.5

145.2

1 March 2012

Translation adjustment

Debt arising on acquisition

Cash flow

Non-cash changes

28 February 2013

€m

€m

€m

€m

€m

€m

Group

Interest bearing loans & borrowings

60.0

0.6

-

183.2

0.6

244.4

Cash & cash equivalents

(128.3)

3.1

-

4.2

-

(121.0)

(68.3)

3.7

-

187.4

0.6

123.4

Interest bearing loans & borrowings at 28 February 2014 are net of
unamortised issue costs. The value of unamortised issue costs at 28
February 2014 was €1.7m (2013: €2.2m). The non-cash change to the
Group’s interest bearing loans & borrowings relates to the amortisation
of issue costs in the year.

Debt on acquisition

In the current financial year, the Group acquired debt of €47.9m on
acquisition of Gleeson (€22.6m relating to a term loan and €25.3m
relating to a full recourse trade debtor factoring arrangement); the
term loan was repaid immediately post closing of the transaction. The
trade debtor factoring arrangement was repaid in full and cancelled on
30 June 2013; the outstanding balance on acquisition with respect to
this arrangement was €25.3m and this increased to €31.2m, before being
settled in full by the Group.

In addition, the Group acquired debt of €3.6m on the acquisition of
Biofun, of which €3.5m was repaid during the financial year with the
remaining outstanding debt of €0.1m classified within current
liabilities. The outstanding debt as at 28 February 2014 was fully
repaid and cancelled on 21 March 2014.

Borrowing facilities

The Group manages its borrowing ability by entering into committed loan
facility agreements.

In February 2012, the Group entered into a committed €250.0m
multi-currency five year syndicated revolving loan facility with seven
banks, namely Bank of Ireland, Bank of Scotland, Barclays Bank, Danske
Bank, HSBC, Rabobank, and Ulster Bank, repayable in a single instalment
on 28 February 2017. The facility agreement provided for a further
€100.0m in the form of an uncommitted accordion facility which the Group
successfully negotiated with the banks as committed in December 2012.
The facility agreement permits the Group to avail of further financial
indebtedness, excluding working capital and guarantee facilities, to a
maximum value of €150.0m, subject to agreeing the terms and conditions
with the lenders. Consequently the Group is permitted under the terms of
the agreement, to have debt capacity of €500.0m of which €309.6m was
drawn at 28 February 2014 (2013: €246.6m was drawn).

Under the terms of the agreement, the Group must pay a commitment fee
based on 40% of the applicable margin on undrawn committed amounts and
variable interest on drawn amounts based on variable Euribor/Libor
interest rates plus a margin, the level of which is dependent on the net
debt:EBITDA ratio, plus a utilisation fee, the level of which is
dependent on percentage utilisation. The Group may select an interest
period of one, two, three or six months.

There were no repayments under the Group’s committed loan facility
agreement in the current year. During the previous financial year, the
Group, using surplus cash resources, repaid and cancelled all funds
(€60.0m) drawn under its maturing 2007 euro facility, it also repaid
€5.2m ($7.0m) in January 2013 under its 2012 multi-currency facility.

All non-current bank loans are guaranteed by a number of the Group’s
subsidiary undertakings. The facility agreement allows the early
repayment of debt without incurring additional charges or penalties. All
non current bank loans are repayable in full on change of control of the
Group.

• Interest cover: The ratio of EBITDA to net interest for a period of 12
months ending on each half year date will not be less than 3.5:1

• Net debt/EBITDA: The ratio of net debt on each half year date to
EBITDA for a period of 12 months ending on a half year date will not
exceed 3.5:1

At year-end the Group had net debt of €145.2m, with a Net debt/ EBITDA
ratio of 0.99:1 calculated in accordance with the terms of the Group’s
revolving credit facility agreement.

12. RETIREMENT BENEFIT OBLIGATIONS

The Group operates a number of defined benefit pension schemes for
certain employees, past and present, in the Republic of Ireland (ROI)
and in the United Kingdom (UK), all of which provide pension benefits
based on final salary and the assets of which are held in separate
trustee administered funds. The Group closed its defined benefit pension
schemes to new members in April 2007 and only provides defined
contribution pension schemes for employees joining the Group since that
date. The Group provides permanent health insurance cover for the
benefit of certain employees and separately charges this to the income
statement.

The defined benefit pension scheme assets are held in separate trustee
administered funds to meet long-term pension liabilities to past and
present employees. The trustees of the funds are required to act in the
best interest of the funds’ beneficiaries. The appointment of trustees
to the funds is determined by the schemes’ trust documentation. The
Group has a policy in relation to its principal staff pension fund that
members of the fund should nominate half of all fund trustees.

There are no active members remaining in the Executive defined benefit
pension scheme (2013: no active members). There are 80 active members
(representing < 10% of total membership) in the ROI Staff defined
benefit pension scheme (2013: 106 active members) and 5 active members
in the UK scheme (2013: 8 active members). The Group’s ROI defined
benefit pension reform programme concluded during the financial year
ended 29 February 2012 with the Pensions Board issuing a directive under
Section 50 of the Pensions Act 1990 to remove the mandatory pension
increase rule, which guaranteed 3% per annum increase to certain
pensions in payment, and to replace it with guaranteed pension increases
of 2% per annum for each year 2012 to 2014 and thereafter for all future
pension increases to be awarded on a discretionary basis.

Actuarial valuations – funding requirements

Independent actuarial valuations of the defined benefit pension schemes
are carried out on a triennial basis using the attained age method. The
most recent actuarial valuations of the ROI schemes were carried out
with an effective date of 1 January 2012 while the most recent actuarial
valuation of the UK scheme was 31 December 2011. The actuarial
valuations are not available for public inspection; however the results
of the valuations are advised to members of the various schemes.

The funding requirements in relation to the Group’s ROI defined benefit
pension schemes are assessed at each valuation date and are implemented
in accordance with the advice of the actuaries. Arising from the formal
actuarial valuations of the main schemes on 1 January 2009, the schemes’
independent actuary, Mercer (Ireland) Limited, submitted Actuarial
Funding Certificates to the Pensions Board confirming that the Schemes
did not satisfy the Minimum Funding Standard at that date. Given that
the removal of guaranteed pension increases would not correct this
situation, Funding Proposals including an updated actuarial valuation
were submitted to, and approved by the Pensions Board on 23 February
2012, which the Directors believe will enable the schemes to meet the
Minimum Funding Standard by 31 December 2016. The Funding Proposals
commit the Group to contributions of 14% of Pensionable Salaries to fund
future pension accrual of benefits (previously 38.1% of Pensionable
Salaries), a deficit contribution of €3.4m and an additional
supplementary deficit contribution of €1.9m which the Group reserves the
right to reduce or terminate on consultation with the Trustees, if the
Scheme Actuary advises that it is no longer required due to a correction
in market conditions. Funding Proposals cover the period to 31 December
2016. However, they will cease at an earlier date if the scheme funding
target is met before then. The actuaries advised that as at 31 December
2013 the schemes were on track to meet the minimum funding standard and
risk reserve by 31 December 2016, the end of the Funding Proposal period.

Following the 2011 actuarial valuation of the UK defined benefit pension
scheme, a Schedule of Contributions and Recovery Plan was agreed
committing the Group to annual contributions of £0.4m which the
Directors believe will enable the scheme to meet the Statutory Funding
Objective by June 2015.

The schemes’ independent actuary, Mercer (Ireland) Limited, has employed
the projected unit credit method to determine the present value of the
defined benefit obligations arising and the related current service cost.

At 28 February 2014, the retirement benefit obligations computed in
accordance with IAS19 (R) Employee Benefits amounted to a net
deficit of €21.4m gross of deferred tax (€22.8m deficit with respect to
the ROI schemes and a €1.4m surplus with respect to the UK scheme) and
€18.8m net of deferred tax (2013: €21.5m gross and €18.8m net of
deferred tax).

The movement in the net deficit is as follows:-

€m

Deficit at 1 March 2013

21.5

Employer contributions paid

(6.8)

Actuarial loss

6.4

Charge to the income statement

0.5

FX adjustment on retranslation

(0.2)

Net deficit at 28 February 2014

21.4

Comprising:

ROI scheme retirement benefit deficit

22.8

UK scheme retirement benefit surplus

(1.4)

Net deficit at 28 February 2014

21.4

The benefit of employer contributions of €6.8m on the retirement benefit
pension obligations on the IAS 19(R) basis was offset by an actuarial
loss of €6.4m. The actuarial loss primarily arose as a result of a
reduction in the discount rate applied to liabilities: ROI schemes
reduced from 3.8% - 4.25% at 28 February 2013 to 3.4% - 3.6% at 28
February 2014. This loss was partially reduced by an experience gain of
€8.4m in relation to membership movements.

All other significant assumptions applied in the measurement of the
Group’s pension obligations at 28 February 2014 are broadly consistent
with those as applied at 28 February 2013.

13. RELATED PARTY TRANSACTIONS

The principal related party relationships requiring disclosure in the
consolidated financial statements of the Group under IAS 24 Related
Party Disclosures pertain to the existence of subsidiary undertakings
and equity accounted investees, transactions entered into by the Group
with these subsidiary undertakings and equity accounted investees and
the identification and compensation of, and transactions with, key
management personnel.

Group Transactions

Transactions between the Group and its related parties are made on terms
equivalent to those that prevail in arm’s length transactions.

Subsidiary undertakings

The consolidated financial statements include the financial statements
of the Company and its subsidiaries. Sales to and purchases from
subsidiary undertakings, together with outstanding payables and
receivables, are eliminated in the preparation of the consolidated
financial statements in accordance with IAS 27 Consolidated Financial
Statements.

Equity accounted investees

On 22 March 2013, the Group acquired 50% of the equity share capital of
Wallaces Express Limited, a wholesaler of beverages in Scotland, for a
consideration of £10.0m (€11.8m at date of payment). Costs of €0.2m
incurred in relation to this transaction were capitalised as part of the
cost of the investment.

On 21 March, 2012, the Group acquired a 25% equity investment in Maclay
Group plc, a leading independent Scottish operator of managed public
houses. The business primarily includes operating 15 wholly owned
managed houses and 11 managed houses owned by two separate Enterprise
Investment Schemes. The total cost of the investment was £2.1m (€2.5m at
date of payment). The investment secures Tennent Caledonian Breweries UK
Limited (a 100% subsidiary of the Group) as the main beer supplier to
the pub estate.

On 28 November 2012, the Group invested £0.3m (€0.4m at date of payment)
in Thistle Pub Company Limited, a joint venture with Maclay Group plc.

Loans extended by the Group to joint ventures and associates are
considered trading in nature and are included within advances to
customers in Trade & other receiveables.

Details of transactions with equity accounted investees during the year
and related outstanding balances at the year end are as follows:

Net Revenue

Balance outstanding

2014

€m

2013

€m

2014

€m

2013

€m

Sale of Goods to Equity accounted investees:

Maclay Group plc

1.4

0.8

0.2

0.1

Thistle Pub Company Limited

0.2

-

-

-

Wallaces Express Limited

18.0

-

2.5

-

19.6

0.8

2.7

0.1

Balance outstanding

2014

€m

2013

€m

Loans to Equity accounted investees:

Thistle Pub Company

1.3

-

Purchases

Balance outstanding

2014

2013

2014

2013

€m

€m

€m

€m

Purchase of Goods from Equity accounted investees:

Wallaces Express Limited

6.6

-

1.3

-

All outstanding balances with equity accounted investees, which arose
from arm’s length transactions, are to be settled in cash within one
month of the reporting date. The loan to Thistle Pub Company is
repayable by equal quarterly repayments over a period of fifteen years
at an interest rate of 4.5% over the Bank of England base rate or
notwithstanding the other provisions of the agreement on written demand
by the Group.

Key management personnel

For the purposes of the disclosure requirements of IAS 24 Related Party
Disclosures, the Group has defined the term ‘key management personnel’,
as its executive and non-executive Directors. Executive Directors
participate in the Group’s equity share award schemes and death in
service insurance programme and in the case of UK resident executive
Directors are covered under the Group’s permanent health insurance
programme. The Group also provides private medical insurance for UK
resident executive Directors. No other non-cash benefits are provided.
Non-executive Directors do not receive share-based payments or post
employment benefits.

Details of key management remuneration are as follows:-

2014

2013

Number

Number

Number of individuals

9

9

€m

€m

Salaries and other short term employee benefits

2.5

2.2

Post employment benefits

0.4

0.3

Equity settled share-based payments

0.3

1.0

Dividend income with respect of JSOP Interests

0.4

0.4

Total

3.6

3.9

Joris Brams was appointed to the Board on 23 October 2012 and is
included in the prior year numbers from the date of his appointment.

The relevant disclosure of Directors remuneration as required under the
Companies Act, 1963 is as outlined above.

Two of the Group’s executive Directors were awarded Interests under the
Group’s Joint Share Ownership Plan (JSOP). When an award is granted to
an executive under the Group’s JSOP, its value is assessed for tax
purposes with the resulting value being deemed to fall due for payment
on the date of grant. Under the terms of the Plan, the executive must
pay the Entry Price at the date of grant and, if the tax value exceeds
the Entry Price, he must pay a further amount, equating to the amount of
such excess, before a sale of the awarded Interests. The deferral of the
payment of the further amount is considered to be an interest-free loan
by the Company to the executive and a taxable benefit-in-kind arises,
charged at the Revenue stipulated rates (Ireland 12.5% to 31 December
2012 and 13.5% from 1 January 2013, UK 4%). The balances of the loans
outstanding to the executive Directors in the context of the above as at
28 February 2014 and 28 February 2013 are as follows:

28 February 2014

€’000

28 February 2013

€’000

Stephen Glancey

111

111

Kenny Neison

83

83

Total

194

194

The loans fall due for repayment prior to the sale of their awarded
Interests.

14. POST BALANCE SHEET EVENT

Acquisition of remaining shares in Wallaces Express Limited

On 18 March 2014, the Group announced it acquired the remaining 50%
equity share capital of Wallaces Express Limited, a wholesaler of
beverages in Scotland. This purchase follows the acquisition of a 50%
stake in the business in March 2013. The consideration for the
acquisition of the remaining 50% was £10.0m (€12.0m euro equivalent at
date of acquisition).

The assets and liabilities of Wallaces Express Limited, on 18 March
2014, date of acquisition were as follows:-

Wallaces

Book value

€m

Property, plant & equipment

3.9

Brands & other intangible assets

0.3

Inventories

10.5

Trade & other receivables – current

9.4

Cash and cash equivalents

3.4

Trade & other payables

(10.7)

Current tax liabilities

(0.1)

Net identifiable assets and liabilities on date of acquisition

16.7

Total consideration paid to acquire remaining 50%

12.0

The preliminary assessment of the financial position of Wallaces as at
18 March 2014 indicates that no fair value adjustments are required.